A new sub-section 1B was added to Section 80CCD in the last budget and it allows an additional tax deduction of up to Rs 50,000 on contributions to NPS
27-Oct-2015 •Research Desk
What is the deduction available to a government servant under Section 80CCD(1B) if his contribution to NPS is ₹2 lakh and if his contribution to NPS is ₹1 lakh?
Section 80CCD provides tax deduction on contributions to National Pension Scheme (NPS). A new sub-section 1B was added to Section 80CCD in the last budget and it allows an additional tax deduction of up to ₹50,000 on contributions to NPS. However, the total tax deduction one can claim under Section 80C and Section 80CCD is ₹2 lakh.
To answer your theoretical query, the person who has already exhausted the maximum limit of ₹2 lakh won't be able to claim the additional tax deduction under the new sub-section, while the person who has invested only ₹1 lakh can claim the additional tax benefit of ₹50,000 under 80CCD(1B).